Nottingham Forest has incurred a deduction of four points due to their violation of Premier League profit and sustainability regulations.
An independent commission determined that Forest’s losses up to 2022-23 exceeded the £61m threshold by £34.5m.
As a consequence of the immediate point deduction, they fall beneath Luton Town and into the Premier League’s relegation zone.
Forest said they are “extremely disappointed” with the decision, which they say “raises issues of concern for all aspirant clubs”.
A club statement read: “After months of engagement with the Premier League, and exceptional cooperation throughout, this was unexpected and has harmed the trust and confidence we had in the Premier League.”
Forest becomes the second top-flight team penalized for breaching PSR regulations, following Everton’s 10-point deduction in November, which was later reduced to six upon appeal.
The City Ground club, likely to appeal the ruling, underwent a hearing on 7-8 March. Premier League clubs can incur losses of up to £105m over three seasons, equating to £35m per campaign. However, Forest’s maximum allowable loss was capped at £61m due to spending two years of the assessment period in the Championship.
Initially, the Premier League proposed an “unmitigated” eight-point deduction for Forest, later reduced to six, given the breach was 77% larger than Everton’s.
Forest contested this, arguing it was disproportionate compared to the nine points prescribed for insolvency in the Premier League’s own rules.
Despite demonstrating “exceptional cooperation” with the Premier League during the process, Forest claimed this cooperation was not reciprocated.
The commission’s written findings detail the rationale behind the four-point deduction. Initially facing a six-point deduction – three for the initial breach and three for its size – Forest’s “early plea” and cooperation led to a reduction to four points.
League rules dictate that any appeals process should ideally conclude by 24 May, five days after the season ends.
Forest lost an average of £3m across 2020 and 2021 with a further £40m loss in 2022 and £52m in 2023, amounting to a total of £95m.
They were promoted in May 2022 and signed a British-record 22 new players that summer and made five loan signings. Their net transfer spend over the 2022-23 season was £142.8m.
In terms of outgoings, Forest sold two players for a fee, loaned out nine and released two.
Forest were charged in January and the Premier League said in a statement that both they and Everton “confirmed that they are in breach of the league’s profitability and sustainability rules”.
The Johnson sale
Forest, who hired leading sports lawyer Nick de Marco to defend them, based their case around six points of mitigation but all six were disputed by the Premier League.
Forest considered the sale of Brennan Johnson to Tottenham Hotspur in September as their “golden mitigation”. This transaction, valued at over £45m, occurred after the accounting deadline. Forest argued that delaying Johnson’s sale allowed them to secure a higher fee compared to if they had sold him by 30 June.
According to the written reasons, Forest received an offer of 50 million euros (£42.7m) from Atletico Madrid for Johnson on 30 June. Forest responded with a counter-offer of 65 million euros (£55.6m) on the same day, but discussions did not progress further. Forest subsequently turned down three offers from Brentford for Johnson in July and August, ranging from £32.5m to £40m.
Forest considered the sale of Brennan Johnson to Tottenham Hotspur in September as their “golden mitigation.” The deal, valued at over £45m, occurred after the accounting deadline. Forest argued that selling Johnson later allowed them to secure a higher fee than if they had sold him by 30 June.
According to the written reasons, Forest received an offer of 50 million euros (£42.7m) for Johnson from Atletico Madrid on 30 June. Forest countered with 65 million euros (£55.6m) on the same day, but discussions did not progress further. Forest also turned down three offers from Brentford in July and August for Johnson, ranging from £32.5m to £40m.
Johnson, a product of Forest’s academy, was initially not interested in joining Brentford. Tottenham had to wait for the right moment to make their move, which influenced Forest’s position. Johnson’s transfer was ultimately linked to Harry Kane’s move to Bayern Munich, allowing Spurs to move for a replacement once Kane left for Germany in a deal reportedly worth an initial £82m.
The commission determined that the timing of Johnson’s sale was a business decision and not a mitigating factor. Forest also argued they were in a “unique position” as they had spent the previous two years in the EFL, so they had a lower threshold but had not received parachute payments. However, the commission did not consider this a mitigating factor and only credited Forest for their early plea and cooperation.
Following the charge two months ago, Forest expressed confidence in a speedy and fair resolution. Everton is awaiting a potential second punishment related to the assessment period ending with their 2022-23 accounts. Manchester City was also referred to an independent commission in February 2023 after more than 100 alleged rule breaches.
Timeline of Forest case
15 January – Everton and Nottingham Forest are charged by the Premier League for breaches of the league’s profit and sustainability rules. The hearing has to be concluded within 12 weeks of this date, which is 8 April.
7-8 March – Forest’s hearing takes place.
18 March – Forest are docked four points and drop into relegation zone.
25 March – The deadline for any appeal from Forest has to be submitted.
1 April – The latest deadline for the response to the appeal, given it must be within seven days of the plea being received.
8 April (approximate) – ‘Directions hearing’ to set a date for an appeal hearing, which will last between one and three days and conclude no later than 24 May. It is likely to be much earlier in Forest’s case.
19 May – The final day of the Premier League season, when Forest will play Burnley (16:00 BST).
24 May – The latest possible date for an appeal hearing into either the Everton or Forest cases to be concluded.